Tax Tips from Neotax Service

04/08/2022

https://www.youtube.com/watch?v=PhGCnuCdFI4

If you can’t pay all your taxes by the April deadline, file a return anyway and pay what you can. Need extra time? Ask for a filing extension. Learn more at ...

01/15/2022

Treasury Issues Warning Going into Tax Season

Treasury Department officials took the preemptive step on Monday of warning taxpayers that the upcoming tax season, which begins on January 24 and will run through April 18, will be messy and could see delays. Pointing to staffing shortages and paperwork backlogs, officials said taxpayers will likely face frustrations similar to those of last year’s tax season. Potential problem areas include delays in the processing of refunds and returns as well as difficulty in reaching IRS. As of mid-November 2021, the IRS had a backlog of roughly 8.6 million returns left to process. In a separate statement, IRS Commissioner Charles Rettig said IRS is not able to provide the level of service taxpayers deserve and said that more resources for the agency are essential.

01/10/2022

Trouble Anticipated on Tax Returns Due to Advanced Child Tax Credit

For many Americans, filing taxes is a stressful and laborious process. Unfortunately, the Advanced Child Tax Credit (ACTC) and stimulus payments may make this tax season a more stressful one for families. To combat anticipated complications and questions on how to report the ACTC on tax returns, the IRS announced that two letters would be sent.
Letter 6419 will be sent to ACTC recipients starting in December.
Letter 6475 will be sent to recipients of the third round of the Economic Impact Payments at the end of January.
Obviously, some recipients will receive both letters and others only one letter.
If the amounts reported on your Form 104 do not match the amounts on the IRS record, the tax return will be reviewed manually, which may delay any refund by several months.
It is the IRS's hope that by providing Letter 6419 for ACTC recipients and Letter 6475 for Third Economic Impact Payment recipients, it will reduce number of manual reviews by IRS that need to occur, as was the case during Fiscal Year 2021.

01/09/2022

https://www.cleveland.com/business/2022/01/working-from-home-your-paycheck-may-look-different-in-2022.html

Things are changing because a COVID-19-era rule has expired. Ohio’s employers may have now have to withhold taxes differently for people working from home.

12/28/2021

DO NOT LEAVE MONEY ON THE TABLE!
If you received Advanced Child Tax Credit (ACTC) payments during 2021, be sure the amount you received matches the amount on the reconciliation letter. If it does not, your refund will be delayed.

Over 10 million 2019 tax returns were held for manual processing causing an enormous backlog and delayed refunds. The IRS does not want this to happen again.

IRS Commissioner Charles Rettig stated recently that taxpayers should not file their 2021 return until the ACTC has been reconciled either with the IRS Letter 6419 (estimated mailing date January 21, 2022) sent to taxpayer or using IRS Transcript data.

03/12/2021

The American Rescue Plan Act of 2021 Summary
Congress has passed and President Joe Biden has signed the $1.9 trillion COVID-19 relief bill. We are still waiting on a final official summary from the Congressional Joint Committee on Taxation (JTC). Meanwhile, there is final statutory language, an official JTC revenue estimate, and a summary of the bill. The newly enacted law provides:

Additional economic impact payments

A retroactive exclusion for Unemployment Insurance income

Temporary changes to the Earned Income Tax Credit and Child Tax Credit

Extensions and modifications of Dependent Care Assistance

Credits for paid sick and family leave

Extension and modifications of the employee retention credit

A premium tax credit

A number of business and high-income tax increases

Changes to various pension rules

03/06/2021

Senate Set to Vote on Unemployment Amendment

As President Biden works to secure enough votes for his $1.9 trillion COVID-19 relief package, Democratic leadership has agreed to an amendment by Senate moderates to keep unemployment benefits to their current $300 a week level and to eliminate the first $10,200 of unemployment insurance benefits from taxation for tax year 2020. The vote on the amendment is likely to occur this weekend as Congress rushes to complete the bill.

02/23/2021

All taxpayers have the right to pay no more than the correct amount of tax

When taxpayers complete their tax returns, they may discover they will owe taxes. By law, they have the right to pay no more than the correct amount of tax.

This is one of ten Taxpayer Bill of Rights. These are fundamental rights taxpayers have when dealing with the IRS. One of which is the right to pay no more than the correct amount of tax, including interest and penalties, and to have the IRS apply all tax payments properly.

This means taxpayers are entitled to:

File for a refund if the they believe they overpaid.

Write or call the IRS office that sent the notice or bill. Taxpayers can do this if they believe the notice or bill is incorrect in any way. When challenging information in a bill or notice, taxpayers should be ready to provide copies of any records that may help correct the error. If the taxpayer is correct, the IRS will make the necessary adjustment to their account and send a corrected notice.

Amend a tax return if they discover an error. They can also amend this return if there were mistakes in their filing status, income, deductions or credits.

Request any amount owed be removed if it's more than the correct amount due.

Request the IRS remove any interest from their account if the IRS caused unreasonable errors or delays.

Submit an offer in compromise, asking the agency to accept less than the full tax debt, if the taxpayer believes they don't owe all or part of the debt.

More information:

02/08/2021

Unemployment Scam
This season has seen a rise in fraudulent claims of unemployment benefits from unscrupulous scammers. The result is that taxpayers may receive a 1099-G for unemployment benefits from certain states even if the taxpayer never made unemployment claims, or has never been in the state. For more information, read this article:

The nation has been weathering nearly one million weekly initial unemployment claims since the beginning of the pandemic. For many qualifying Americans, unemployment insurance benefits are the only thing preventing food insecurity and homelessness while trying to find a new job. Unfortunately, some....

02/05/2021

Beware of ‘ghost’ preparers who don’t sign tax returns

WASHINGTON – The Internal Revenue Service reminds taxpayers to avoid “ghost” tax return preparers whose refusal to sign returns can cause a frightening array of problems. It is important to file a valid, accurate tax return because the taxpayer is ultimately responsible for it.

Ghost preparers get their scary name because they don’t sign tax returns they prepare. Like a ghost, they try to be invisible to the fact they’ve prepared the return and will print the return and get the taxpayer to sign and mail it. For e-filed returns, the ghost preparer will prepare but refuse to digitally sign it as the paid preparer.

By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number, or PTIN. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a fast buck by promising a big refund or charging fees based on the size of the refund.

Unscrupulous tax return preparers may also:

Require payment in cash only and not provide a receipt.
Invent income to qualify their clients for tax credits.
Claim fake deductions to boost the size of the refund.
Direct refunds into their bank account, not the taxpayer’s account.

The IRS urges taxpayers to choose a tax return preparer wisely. The Choosing a Tax Professional page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.

No matter who prepares the return, the IRS urges taxpayers to review it carefully and ask questions about anything not clear before signing. Taxpayers should verify both their routing and bank account number on the completed tax return for any direct deposit refund. And taxpayers should watch out for preparers putting their bank account information onto the returns.